Markets were on course to open in the green as stocks continued to rally following positive economic data and blowout earnings from Palantir that eased fears around the artificial intelligence trade.
Dow futures were up 36 points, or 0.1%, in premarket trading Tuesday. Those tied to the S&P 500 were rising 0.3% after just missing a record close in the previous session, while Nasdaq 100 futures were rising 0.5% in premarket trading. All three indexes finished in the green on Monday.
Palantir’s earnings gave a vote of confidence to the AI trade that has become the main market driver. The company helps large organizations sort through their mountains of data and make sense of it using AI. Revenue for the quarter reached $1.41 billion, up 70% year-over-year, while sales in its core U.S. market were up 93% from a year ago.
CEO Alex Karp said the company’s financial results “have again exceeded even our most ambitious expectations.” He added: “Such a massive acceleration in growth, for a company of this scale and size, is a remarkable achievement.”
The market has been concerned that AI spending has ballooned with little regard for market fundamentals and that a bubble could burst but Palantir’s earnings gave hope that the trend has plenty of room to run.
Market sentiment also got a lift after the Institute for Supply Management’s January manufacturing sector survey, which rose to a 52.6 reading. Economists polled by FactSet expected 48.9. A reading north of 50 signals expansion.
Conversely a lack of economic data was lifting some areas of the market as the partial government shutdown means jobs numbers won’t be published on Friday and therefore can’t affect sentiment. Treasury yields were edging higher on the news with the two-year up 0.4 basis points at 3.573%, the 10-year Treasury yield rising 0.4 basis points to 4.280%, and the 30-year Treasury yield increasing 0.6 basis points to 4.914%, according to Tradeweb data.
The precious metals rally also reignited with gold and silver prices surging early Tuesday after a selloff over the weekend had bled into falling stock prices early Monday. Gold was up 6% to $4,934 per ounce, Silver was surging 12% to $86.36 an ounce.
The dollar was falling after a recovery in recent days, which was driven by President Donald Trump’s pick of Kevin Warsh as Federal Reserve chair.
The nomination has given rise to hopes in the market that a “hawk,” or someone who favors more restrictive monetary policy, will lead the Fed, Commerzbank’s Michael Pfister said in a note. While the nomination briefly interrupted the market’s sentiment towards a weaker dollar, the “underlying fundamental conditions have not yet changed,” he added.
The DXY dollar index fell 0.2% to 97.419.